Consider consolidation to trim costs

Lee Plotkin

Most, if not all, of you have been greatly impacted in some way by rising commodities and supply costs. Most of these costs are expected to continue rising. Between those increases and reduced guest counts, it’s been brutal.
 
What can you do to remain profitable? Let's explore where opportunity can be found for relief without cutting quality.

A few of the largest areas of impact have to do with the intangibles, which can be difficult to track. These are areas of cost that are rarely noticed by operators, yet have a tremendous impact on the bottom line.

For instance, did you know that: Many restaurant companies cut an average of 1,560 checks to their vendors, per year...per restaurant? At an average cost of $15 per check (which is the time spent by their accounting person or an outsourced agency), that adds up to $23,400 in annual costs (per restaurant). Just to pay their supplier invoices.

I had no idea... so awhile back I polled several of my current and past clients, and this is what they told me. These growing restaurant operations reported that their staffs spend an average of 1,108 hours per year, per restaurant, ordering and receiving products from their vendors. With an average labor cost of $13 per hour, that's $14,404 in annual costs (per restaurant) just to order and receive their food and nonfood supplies.

Drop your own numbers into the equation to estimate what you might be paying.

I would suggest imitating what many of the larger restaurant chains have been doing to combat rising costs. One of the keys to survival during these tough economic times has been to consolidate purchasing.

Consolidating as much as possible can result in greater use of buying power with suppliers and manufacturers. This will lower overall costs and reduce the number of delivery trucks that show up at the back door. It also means less time required by staff to order and receive products and fewer checks cut. These key areas of cost reduction can translate to your operation as well.

Lee Plotkin brings more than 26 years of purchasing expertise and six years of operations experience to the table for growing restaurant companies. Plotkin has achieved great success in streamlining purchasing operations, setting up win-win scenarios and taking cost out of the supply equation for emerging brands. His company, L. P. Enterprises, works with small to medium size restaurant operations to create or improve upon their purchasing programs, which results in substantial savings and helps set the foundation for successful growth. Among his clients are Del Frisco’s Restaurant Group, Pollo Campero and Truluck’s Restaurant.